International Brent crude futures were trading at $34.89 per barrel at 0139 GMT (8:39 p.m. ET), down 40 cents from their last settlement. U.S. West Texas Intermediate (WTI) crude futures were down 21 cents at $32.86.
NEW YORK: Oil markets tumbled more than 4 percent on Wednesday, erasing most of the previous session's gain, as a raft of bearish U.S. inventory data heightened concerns about a global glut.
U.S. crude stockpiles fell less than expected last week, distillate inventories rose the most since January and gasoline stocks unexpectedly increased, the Energy Information Administration (EIA) said, painting an unusually weak demand picture during the traditionally busy summer driving season. [EIA/S]
The EIA's report pressured prices in a market already bearish after world energy watchdog the International Energy Agency (IEA) warned of a global oil glut, saying surging crude stocks have pushed floating storage to seven-year highs.
"A surprising build in gasoline in the peak of U.S. driving season and a very large build in heating oil will set the tone for lower prices as we go forward," said Tariq Zahir, a trader in crude oil spreads at Tyche Capital Advisors in New York.
"The products markets will continue to put weakness in the energy complex."
Brent crude settled down $2.21, or 4.6 percent, at $46.26 a barrel.
U.S. crude fell $2.05, or 4.4 percent, to close at $44.75.
On Tuesday, both Brent and WTI rose nearly 5 percent, their biggest daily gain since April, on shortcovering and technical buying a day after hitting two-month lows.
Refined oil products also slumped on Wednesday, stung by the EIA data. U.S. gasoline settled nearly 4 percent lower while heating oil, a proxy for ultra low sulfur diesel, dropped more than 5 percent.
The profit margin refiners get for diesel, known as the diesel crack, fell to a two-month low.
"(Stocks) are at such elevated levels, especially for products for which demand growth is slackening, that they remain a major dampener on oil prices," the IEA said.
The U.S. government's EIA said crude inventories fell 2.5 million barrels last week, less than a 3 million-barrel drop forecast in a Reuters poll.
Distillate stockpiles, which include diesel and heating oil, rose 4.1 million barrels, versus expectations of a 256,000-barrel increase, the EIA data showed.
Gasoline stocks rose unexpectedly by 1.2 million barrels, compared with a 432,000-barrel drop forecast. That came during the week of the July 4th holiday, typically the busiest U.S. driving period.
"Miles driven this July holiday were expected to be a record high and demand at the pump was expected to reflect that point," said Troy Vincent, analyst at New York-based crude cargo tracker Clipperdata. "It is continuing this trend of crude-glut-turned-gasoline-glut."- Reuters
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